tag:blogger.com,1999:blog-235433516644980443.post3561466598076200732..comments2024-03-27T05:08:10.195-04:00Comments on Jeff For Banks: Five Challenges to Your Bank of the Future and Ideas to Overcome ThemJeff Marsicohttp://www.blogger.com/profile/12153599647481141591noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-235433516644980443.post-32603807748440596312016-12-16T03:17:08.899-05:002016-12-16T03:17:08.899-05:00This comment has been removed by a blog administrator.Anonymoushttps://www.blogger.com/profile/00534670985883471950noreply@blogger.comtag:blogger.com,1999:blog-235433516644980443.post-19461487954874863342016-10-31T09:28:14.939-04:002016-10-31T09:28:14.939-04:00Exactly the ideas I was looking for, Mike!
"...Exactly the ideas I was looking for, Mike!<br /><br />"Assets Under Management" is right on, as many banks sell the guaranteed portion of SBA loans, keeping only the un-guaranteed portion on their books, and reap the one-time gain and the servicing income. This produces a capital efficient return while meeting customer borrowing needs. <br /><br />So long as the loans perform, of course.<br /><br />Thank you for the comment!<br /><br />~ JeffJeff Marsicohttps://www.blogger.com/profile/12153599647481141591noreply@blogger.comtag:blogger.com,1999:blog-235433516644980443.post-5880807714265531302016-10-29T15:33:20.686-04:002016-10-29T15:33:20.686-04:00Jeff -- Another great post. Hopefully I am on th...Jeff -- Another great post. Hopefully I am on the mark with your “any other challenges” question.<br /><br />I would add focus upon efficient deployment of capital. Community banks will never be bigger than their regional and national counterparts in our lifetimes, but they can provide superior returns to their shareholders by being smarter.<br /><br />This might be capital management 101, but I don’t hear it enough in the board room, so here is my idea to follow your theme.<br /><br />Don’t focus on total assets (size) focus on loans to assets (mix). In other words, improve ROE by replacing lower yielding surplus funds balance with risk-appropriate loan balance instead.<br /><br />Don’t focus on total deposits, focus on deposit mix. What portion of the balance sheet is comprised of relationship deposits (low cost checking and savings) versus rate sensitive funds (MMkt, CD/IRA and borrowings). In other words, improve ROE by lowering funding cost.<br /><br />Don’t focus on traditional fee and service charge income, instead, ask yourself each day, what products and services are our customers buying somewhere else that we could provide at a profit, even a small one. For example, consumers purchase identity theft protection, cell phone insurance, etc. Why don’t we bundle it with a fee-based checking account? We have an HR department in our bank, why can’t we provide outsourced HR services to our smaller commercial clients?<br /><br />Non-interest income exerts no pull on capital. If I can make a small profit on a marginal activity, product or service, especially if it is recurring in nature, I could care less that it makes my efficiency and expense to asset ratios look worse.<br /><br />Don’t let liquidity be a stop sign for your lending vehicle. If you are good at lending, then move items off the balance sheet to keep the lending engine running to maintain liquidity.<br /><br />Don’t look at total assets, look at assets under management – the sum total of assets, plus loans sold but serviced, plus loans participated out, plus wealth management assets under management.<br /><br />I know all of these things are easy to say, and hard to execute upon, but it all starts with focus; misguided focus will always lead to a sub-optimal outcome.<br />Anonymoushttps://www.blogger.com/profile/07875534656340044646noreply@blogger.com